A Plan Sponsor Notices Account Balances Aren’t Improving

December 30, 2013 (PLANSPONSOR.com) - It all started when Vickie Haskins, city recorder for the city of Shelbyville, Tennessee, noticed the market was improving, but participant account balances were not.

Haskins
tells PLANSPONSOR she has been with the city for three years and from reviewing
participant statements during that time, she realized participants’ accounts
were not growing, even though the stock market was doing well. Haskins also saw the city’s
defined benefit (DB) plan had gotten down to 50% funded and its assets weren’t
growing either.

Shelbyville’s
employees hired before 2005 are in a DB plan, but that plan became too
expensive for the city to maintain, she says. Everyone hired in 2005 or later
is in a 401(k). All of them participate because the city deposits an amount
equal to 5% of employees’ income to the plan whether the employees defer salary
into it or not. Participants in the DB plan may also make deferrals into the
401(k).

The
city has 170 full-time employees. There are 122 active participants in its
401(k) plan.

Haskins
says the city didn’t get any service from its prior retirement plan provider. “I
think our $10 million account perhaps wasn’t big enough for them to care about,”
she opines.

The
city switched everything to OneAmerica in March 2013. The 401(k) is on
OneAmerica’s Index(k) platform. The transition was completed in July, and the
retirement plans have just finished their first quarter with OneAmerica.

It was last December
that Shelbyville started a request for proposals (RFP) for both plans. “We had
several companies submit RFPs, and had several factors to consider, but meeting
the staff at OneAmerica let us know it was best way to go,” Haskins says.

The
city chose OneAmerica in part because it has a local presence. There is a Brentwood,
Tennessee, office with staff that will come to Shelbyville and meet with
employees once they are eligible for the 401(k) plan—following completion of
one year of service. In addition, reports about investments came from several fund companies using
the former provider, now they are streamlined into one report with OneAmerica’s Index(k)
solution.

Index(k)
offers educational programs, call center services and customized communications
for participants. In addition, it offers online services for participants.
Haskins says she has had no complaints from participants.

The
solution also provides Shelbyville with a sole representative to call with
questions or for information. OneAmerica provides a quarterly analysis of the
city’s accounts, but it also emails Haskins monthly reports to use for
balancing. “Fees
are much lower with One America than with our prior provider. Investments are
being watched more closely, and we’ve already seen better growth in participant
accounts,” Haskins states.

Aside
from the OneAmerica solution, for a small fee, participants can sign up with Artesys,
which provides a managed account product offered through R. T. Jones Capital
Equities Management, Inc. Artesys is a
3(21) co-fiduciary adviser with the city of Shelbyville. Artesys’ managed accounts
serve as a qualified default investment alternative (QDIA) for
participants.

Haskins
reiterates the importance of employee education. “Before we had to handle all
that, and it’s not good for an employer to be advising employees [about
investments]. They were basically on their own,” she says.

In sum, OneAmerica
had so many things Shelbyville needed to help participants grow their
retirement accounts, so the city bundled its retirement programs with them,
Haskins concludes. “We’ve already seen better growth in participants’ accounts,”
she says.